Compensation Professionals in XYZ Company Use Regression Analysis to Determine

question 36

Multiple Choice

Compensation professionals in XYZ Company use regression analysis to determine the pay rates of its marketing professionals.There are 4 different marketing job titles in XYZ Company.Compensation professionals use job evaluation points assigned to each marketing job title and a salary survey data.In other words,they regress job evaluation points on the salary data.What does it mean when the R² value of this regression turns out to be 0.85?

• A)All of the variation in market pay can be explained by the company's job structure.
• B)None of the variation in market pay can be explained by the company's job structure.
• C)A large amount of the variation in market pay can be explained by company's job structure.
• D)A small amount of the variation in market pay can be explained by company's job structure

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Definitions:

Capital Budgeting

The process through which a company evaluates and decides on the investments in projects and acquisitions that will provide long-term benefits.

Forecasted Cash Flows

Projections of how much cash a company will generate and use over a certain period, used for planning and investment assessment.

Capital Budgeting Investment Rule

Guidelines or criteria used by businesses to evaluate and select among potential investments or projects based on their expected returns or value.

Increase in Cost

A financial term indicating a rise in expenses or prices, affecting the overall cost structure of a business or the price level in an economy.